Delaware in the spotlight
oh boy where are they going to run now:
This is from a NY Times piece that is also now featured on Huffingtonpost
Wall Street, Sand Hill Road, LaSalle Street: Some corporate addresses scream money. Then there is North Orange Street, which whispers it.
North Orange, a ho-hum thoroughfare in Wilmington, Del., is, on paper, home to more than 6,500 companies. Many of them are empty shells. They make nothing and sometimes employ just a lone clerk. But all are there for the same reason: to help corporations avoid paying taxes in other states.
And the beauty of it is if you drive a few blocks you can score all the crack you want too!
Critics of the arrangement in Delaware say it cheats state governments out of money. Delaware, these people say, has created its own onshore Cayman Islands. Even the Swiss are complaining, claiming that the United States is letting this homegrown haven flourish even as the I.R.S. pursues offshore shelters.
Defenders of the arrangement — corporate executives, tax lawyers and, unsurprisingly, Delaware officials — rebuff such criticism. Mailbox subsidiaries like the ones along North Orange Street do nothing to minimize companies’ federal tax bills, they say. Corporations must still pay Uncle Sam. Moreover, these people say, many companies are drawn to Delaware for its business-friendly laws and courts, not to save on taxes.
That is certainly the view at 1209 North Orange Street, a nondescript low-slung building at the corner of West 13th Street. This address serves as a tax minimizer for dozens of brand-name companies, among them Dillard’s, the department store chain based in Little Rock, Ark., and Kentucky Fried Chicken, which is part of Yum Brands of Louisville, Ky. All of them, and nearly two-thirds of the Fortune 500, have tax-exempt subsidiaries at this address to reduce their state tax bills.
And here the state is going to hit its servants with an 8% tax cut when there is all this low hanging fruit out there.
In April, a senior official of the Cayman Islands Financial Services Association asserted that Delaware, along with Nevada and Wyoming, promoted tax evasion and money laundering, thus qualifying the United States as a tax haven. Federal officials view the issue as a state matter and are not pushing for changes in Delaware, the home state of Vice President Joseph R. Biden Jr.
Delaware…home of tax free, well, everything
This is some defense.
…. many companies are drawn to Delaware for its business-friendly laws and courts, not to save on taxes.
I don’t see how much benefit Delaware gets from these businesses if they don’t employ people in the state. I’m sure Delaware gets some kind of fee from them but we don’t get jobs. Another issue is though, if we close the loophole this will just occur in other places that haven’t closed the loophole.
I think we need to make sure that companies enjoying the benefits of taxpayer money (how much have we bailed them out now?) pay their fair share of taxes as well.
I am glad you bring up the conditions of Wilmington which has been under one party rule for years. Unfortunately, the conditions in Wilmington have nothing to do with corporations. It has to do with a dysfunctional government who uses people at election time and forgets them after the votes are counted.
read the following http://delawarerepublican.wordpress.com/2009/05/30/the-role-of-corporations/
You miss the point again. It seems everything which is successful is bad and should be taxed beyond belief. The companies who Headquarter here pay social security taxes, unemployment taxes, federal and the list goes on. Plus they pay employees. To do this they need a stable and professional legal arena.
Simple fact, without the incorporation and bank taxes/fees we would be more taxed then New Jersey.
Mike Protack
‘….home of tax free, everything’ ……..
except your paycheck. We’re still taxin’ the hell out of working people. 🙁
The article would have been helpful if it were written in the usual way, i.e., “A provision in Delaware tax laws permits manufacturers and retailers to shield a portion of their income from state income tax … ”
Instead, the lead is buried in the 13th paragraph. The result: intelligent readers might think that Delaware is a haven to reduce federal tax liability, which is not the case.
The Delaware holding company law certainly is open to criticism, but this article is hideous. Since there is no news here – the holding company provision has been essentially unchanged for a quarter-century – it has to be manufactured. The article is riddled with minor errors, judgmental language and misleading organization.
Yeah. We should get rid of the corporations. They’re evil. Besides, who would miss a wee $1 billion in revenue?
Who even said that ass? Hold on the phone is ringing…
…Okay I’m back. The Club for Growth called. They want their straw man back.
We get $1 billion from these corporate shills? Why not make it l billion + 780 million.. and close the gap in our State? Whats up with Markell….a little tooooo business friendly, while the workers of this State are taxed more, receive less?
For Corporate america….Delaware money laundering would still be cheap.
“Why not make it l billion + 780 million.. and close the gap in our State?”
Because there are 49 other states out there who would love the first billion and are already working hard to try and get those companies to move.
And because it’s not their fault that we have 50% more government employees per capita than the US average or that we don’t know the difference between a check and a credit card.
For once, FSP is right. We’ve raised the LLC fee from $100 to $250 in just 3 years. As the Chinese Communists have shown in Hong Kong, there is profit in kowtowing to external business forces.